RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Fri’s continuation of the major downtrend below last Thur’s 98.705 low defines Thur’s 98.86 high as the latest smaller-degree corrective high this market is now required to sustain losses below to maintain a more immediate bearish count.  Its failure to do so will confirm a threatening bullish divergence in momentum and expose a corrective recovery of indeterminable scope.  Per such, shorter-term traders are advised to use 98.86 as our new short-term parameter from which to rebase and manage the risk of a still-advised bearish policy.  This tighter but objective risk parameter may come in handy ahead of the Fed’s release this afternoon of its latest FOMC meeting minutes.

On a broader scale, a bullish divergence in admittedly short-term momentum could define the end of a prospective major 3rd-Wave down from 04-Aug’s 99.50 high as labeled in the daily chart above, exposing a relatively larger-degree correction higher.  Given the magnitude of the secular bear trend however, commensurately larger-degree strength above huge former support-turned-resistance around the 99.12-to-99.16-area remains required to negate our long-term bearish count and policy to the point of non-bearish measures like short-covers by longer-term institutional players.  These longer-term players have the option of acknowledging and accepting whipsaw risk (below last week’s 98.68 low) in exchange for steeper nominal risk above 99.16 by paring bearish exposure on a recovery above 98.86 in order to reduce the risk of an interim corrective rebound.

These issues considered, a bearish policy and exposure remain advised with a recovery above 98.86 required to pare or neutralize exposure commensurate with one’s personal risk profile.  In lieu of such 98.886+ strength, further and possibly accelerated losses should not surprise.

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